How an Economic Slowdown Could Affect the Housing Market

Recently, news of economic slowdown and possible recession across the U.S. has been spreading. Naturally, many people start to wonder, “Will home prices drop?” or “Is it safe to buy or sell a home right now?”

However, looking at past data shows that recessions do not necessarily lead to falling home prices. In fact, during several past downturns, the housing market remained stable or even grew.

Recession = Falling Home Prices? Not necessarily.

Many people recall the 2008 financial crisis and assume that a recession will automatically trigger a sharp decline in home prices. But that’s not always the case.Of the six recessions that have occurred since the 1980s, home prices actually rose during four of them.

Unlike 2008, today’s market is still facing limited inventory. While supply has slightly increased in some areas, it remains well below pre-pandemic levels.Since demand still outweighs supply, experts believe there is a low likelihood of a significant price crash.

According to analysis by U.S. real estate data firm Cotality, recent home price trends show healthy and modest growth, rather than the rapid surges of the past.

Mortgage Rates Are Likely to Go Down

In times of economic slowdown, central banks typically lower interest rates or ease monetary policy. Historically, during all six previous recessions, mortgage rates fell.

This means if the economy weakens further, mortgage rates could decline again, which would increase buyers’ purchasing power.Although it may be difficult to return to the ultra-low 3% rates seen during the pandemic, a drop from current levels is very possible.

Now Is About Seeing the Opportunity

Economic downturns do not affect everyone equally. For buyers, lower mortgage rates could be a major opportunity.For sellers, low inventory levels could make your property more competitive in the market.

Looking back, the housing market has continued moving forward even during recessions. Often, those who took action during uncertain times ended up benefiting the most.

This could be one of those moments of opportunity.

Final Thoughts

A slowdown or recession does not automatically spell disaster for the housing market.In fact, with potential interest rate cuts and stable home prices, we are entering what many see as a balanced market environment where both buyers and sellers can find good opportunities.

If you want to better understand your local market and find a strategy that works for you, it may be the right time to consult with a professional.

Acting now could shape your future opportunities.

📞 Hansang Chul — Chicago Realty📱 773-717-2227📧 ChicagoBDB@gmail.com